Tata Elxsi Share Price Gains 5% Following Q4 Results and Dividend Announcement

Tata Elxsi's share price experienced a significant rise of 5% in the morning trade on Monday following the announcement of its Q4 results. Specifically, on the BSE, Tata Elxsi's share price opened at ₹4801 and reached an intraday high of ₹5171.50, representing an intraday gain of 5.5% over the previous day's closing price of ₹4899.75. This increase followed the company's announcement of its Q4 results from the previous week and the recommendation of a dividend of ₹75 per share by the Tata Elxsi board. At noon, the share price of the company is trading 7.95% higher at ₹5289.50.

Q4 FY25 Financial Performance

For the fourth quarter of FY25, Tata Elxsi reported a 13.4% quarterly drop in net profit to ₹172.4 crore, compared to ₹199 crore in the previous quarter of FY25. This decline was attributed to ongoing challenges in its main transportation sector, which is facing difficulties due to international trade and geopolitical unrest. The company's operating revenue for Q4 FY25 stood at ₹908.3 crore, which was slightly lower than the ₹939 crore reported in the previous quarter but comparable to the ₹906 crore reported in the year-ago quarter. Earnings before interest, tax, depreciation, and amortisation (EBITDA) during the quarter were ₹207.7 crore, resulting in an EBITDA margin of 22.9%. Despite the profit decline, the stock price increased.

Dividend Recommendation

The Board of Directors of Tata Elxsi recommended a final dividend of 750%, which equates to ₹75 per equity share with a par value of ₹10 each, for the financial year ending on March 31, 2025. This dividend is subject to the approval of the company's shareholders at the upcoming Annual General Meeting.

Analysts' Perspectives and Price Targets

Despite the rise in share price, some brokerages have a cautious outlook on Tata Elxsi. Morgan Stanley has an underweight call on the stock and has cut its price target to ₹4,660, noting that the Q4 earnings missed expectations and that the earnings downgrade cycle could continue due to weak exit revenues and high valuations. JP Morgan also has an underweight call and has reduced its price target to ₹4,400 post Q4 earnings, highlighting that the earnings sharply missed expectations on both revenue and margins for the third successive quarter. ICICI Securities reported muted Q4FY25 earnings for Tata Elxsi and has assigned a reduce call (revised from a sell call) on the stock. 

Technical Analysis

Anshul Jain, Head of Research at Lakshmishree Investment and Securities, suggested that the recent 55% fall from all-time highs and a 48% drop in the last 32 weeks indicates a potential dead cat bounce. He noted a strong open-low setup with a 315% volume surge suggesting selling exhaustion and value buying. 

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